China’s
fluorochemicals industry is witnessing a price hike at the moment, which is
going to be even enhanced by the approaching peak season of sales for
refrigerants and air conditioners. As a result, the fluorine-enriched
refrigerant industry is enjoying a positive development as well.
Source: Pixabay
The
second quarter of the year is traditional the peak season of sales for coolants
like refrigeration and air conditioning in China, thanks to the coming summer
and hence increasing temperatures. Strongly bound to the success of these
coolants, China’s fluorochemicals will benefit from the peak of sales, since
they are one of the main raw materials.
In
fact, already the month February has witnessed price rises of fluorochemicals
in China, which have mainly occurred by the tight supply situation at the
moment, according to market intelligence firm CCM. Most of the upstream
products for fluorochemicals, like fluorite, also have seen price surges in
February, supporting the upgoing price trend even more. The price of fluorite,
for example, was raised by USD29.17/t, according to CCM’s price monitoring.
The
tight supply of fluorochemicals in China these days has several reasons, which
all play together. First of all, the winter in China, which was marked by heavy
snowfall in the northern part of the country, has hindered the production and
transportation of some manufacturers, which shortened the supply at first. In
addition, the Chinese government has started to implement strict environmental
regulations for China’s manufacturers in heavy polluting industries. Hence,
many manufacturers were forced to limit or even stop their production until
they fulfil the environmental standards for the production. Finally, even some
manufacturers did not get the renewal for the mining certificates, when they
did not pass the environmental checks.
The
price rises, which are caused by the bespoke tight supply, are likely to
continue even more in the second quarter of 2017, due to the peak sales season
of refrigerants and air conditioners. This will especially affect the price of
fluorine, which are used in fluorine-enriched refrigerants.
As
the downstream business of fluorochemicals, the fluorine-enriched refrigerants
industry has witnessed price surges in the beginning of 2017 as well. According
to CCM, there are three main factors, which are driving the price for
fluorine-enriched refrigerants in China.
The
first factor can be found in increasing prices of raw materials. The raw
materials for fluorine-enriched refrigerants have undergone serious price
rises, due to the environmental protection measurements in China as well as a
new road safety law, which regulates the transport with trucks more strictly
and causes higher punishments for non-obeying. Thus, the supply of raw
materials grew tighter with an obvious effect on the price.
The
environmental protection measurements have also affected the manufacturers
directly, with improved standards for pollution discharge and increasing
rectifications. Hence, the production was limited, which led to a higher price,
because of short supply.
Finally,
the third factor can be found in an increased demand for air conditioners, due
to price rises and therefore the attempt of distributors to fill their stock
before the prices rise even more.
What
is driving the demand for air conditioners in China is the booming automobile
market, which saw a growth of 14% in 2016 compared to 2015.
What’s
more, foreign demand for HCFC and HFC is going to drop down quickly in the
future, since most of the countries agreed to relinquish on this
fluorochemicals in order to protect the ozone layer from being dismantled.
According to CCM, the purchase in China will increase when there is a supply
shortage in the fluoropolymer and air conditioner maintenance business.
Geographically,
The APAC region is expected to establish as the leading supplier to the global
fluorochemicals market by seizing around 40% of global volume. China will
continue to be the leading producer.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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